CURRENCY QUESTION

Hokitika Guardian, 15 August 1932, Page 5

CURRENCY QUESTION

OTTAWA REPCXKT FINDING THE COMMITTEE. (United Press Association—By Electric Telegraph—Copyright.) . OTTAWA; August, 12. The, heads of the delegations adopted the Currency , Committee’s report, and authorised its publication. The report says:—- ■ ■ • (i) A world-wide riee'in the general levels of Wholesale prices is 1 in the highest degree desirable, l'be evil of falling prices must be attacked by the Government, And individual action in all oases, whether political, economic, financial, or monetary.

(2) • The v Governments represented at Ottawa record’ their • conviction' that international action is urgently necessary. Th®y announce their 1 desire to co-operate with other nations, in any practicable measures for .raising wholesale prices. ■ • V. ' ‘ . (3 In • investigating how to- help raise prices, 'the Conference recognises Britain’s ’'.central position, not only among Empire countries, 'but also in the .world. Trade and finance makes Britain a main factor in anything that can be done. The Conference, therefore weleomai the following statement made by. Mr Neville Chamberlain : • "HU Majesty V Government desires to m wholesale sterling’ prices jrise, The best condition for- this woifld be a rise in gold prices. The absence of a rise in .gold prices: Inevitably imposes limitations on what can be done for sterling. 1A rise .in prices caripot bo effected by monetary action acipiie,'' "since various other factors,; which! have combined to bring about the depression, must also be modified, or remoired befbrej a remedy is assured! The British' Governnevertheless, that an’ ample supply of shott-term ’mbhey at low' rates may have a valuable influence. The Government is confident that the efforts which have ''successfully brought about ■ the present favourable monetary conditions can and will unless jUnforseen difficulties arise, be continued.’' \ (4) The Conference recommends that the British Commonwealth should v act in’conformity’ and id line with, the policy indicated in Mr Chamberlain’s •statement ae far an lies in their power. The primary line of action in the monetary sphere towards a. .rise in prices should be the creation . and maintenance—within .the limits of sound finance—of such conditions as ■ will ' assist in the revival of enterprise, and trade. These conditions include •low rates of interest and'an abundance of. short-term, money,. The) rate, of; in-, threat on .‘all the' various types' 'of loans should be] kept as low as finanrial conditions pejrmii, -It is necessary at' the .same time that these favourable monetary conditions should be achieved not by the inflationary creation of., additional means of payment to"-finance public expenditure, (but .by an orderly, monetary policy safeguarded, if the . necessity should arise, by «udh steps as -will restrain and circumscribe the scope of violent speculative movements of or securities.' It must be remembered that the. success of such a policy would. be hampered and might be nul-. lified by failure to modify and remove important ’. non-monetary 'obstacles, many of which are international in character and require an .international •remedy. The British Commonwealth •should nevertheless take all the steps in its , power to increase public confidence, especially in ’the field of business enterprise and to facilitate trade. ... (5) The Conference recognises the great importance to traders of exchange stability, in as wide an area as possible. ; line'' complete 'solution of this problem "must .await restoration for the satisfactory working of- the international standard. Meanwhile, pendiug such a solution, the Conference considered the possibility of achieving valuable results in two directions, first creating an area of .stability among the countries regulating their curren. cies in relation: to sterling, and secondly by avoiding wide day-to-day fluctuations between sterling and gold. .Regarding fluctuations between sterling and gold, the Conference noted with satisfaction that ...Britain had already established machinery aimed at preventing/'wide fluctuations in the 'sterling and gold value' ’ caused by .sepculative movements. Regarding area and stability the . iJonferEhce recognises the value of countries within the British whose : currencies are linked with sterling, maintaining stability between thrir exchange rates, and the ’Conference looks to a rise in the general level of wholesale prices as the most desirable means of facilitating this result.

\(6) The Conference recognises that all monetary policies’ ultimate aim should be the restoration, of a satisfiactyory international morietary standard. Such a ' standard- should function Hoit (meateij; to /maintain stable exchange rates ■ among all* countries, but also to ensure smooth and efficient working of the machinery of international trade and finance. This postulates an .international agreement among the’ world’s great trading nations. Whfle certa'n States represented at, Ottawa hold very different views on t hi question of the most desirable standard, Conference refrains from making any recommendations on ' the subject, in- view of the fact that the question wil 1 shortly be discussed at an international conference. However, there are several conditions precedent to. the re-establishment of any international monetary standard, the most

important being, first, ia rise on the level of commodity prices to a height more in keeping with the level of costs including the burden of debt'and other fixed and semi-fixed charges, and, secondly, an adjustment of political economic financial .and monetary factors, which caused the breakdown of the gold standard in many countries and which, if not adjusted, would inevitably lead to another breakdown of whatever international standard may be , adopted. The Conference ] emphasises that it is of the utmost) importance to the future working of any international standard that international co-operation should be secured and maintained with a view to avoiding as far -s practicable, wide tions in the purchasing power of the •standard of -alue.